Former banker Frank Quattrone exits Federal court in New York August 22, 2006. A U.S. federal court judge on Tuesday approved a settlement that would let Quattrone avoid a third trial for obstructing justice, opening the door for him to resume his career on Wall Street. REUTERS/Keith Bedford (UNITED STATES)

Photo: KEITH BEDFORD

Former banker Frank Quattrone exits Federal court in New York...

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Former star technology banker Frank Quattrone makes a brief statement in front of Manhattan federal court with his attorney Theodore Wells, left, Tuesday, Aug. 22, 2006 in New York. Quattrone reached a deal with the government Tuesday that allows his criminal case to be dismissed without a third trial. (AP Photo/Louis Lanzano)

Photo: LOUIS LANZANO

Former star technology banker Frank Quattrone makes a brief...

Quattrone triumphant, his future wide open / Deal with U.S. prosecutors may presage banker's return

Frank Quattrone, the onetime Silicon Valley kingmaker who came to personify the excesses of the wildly speculative Internet boom, has reached an agreement with federal prosecutors that frees him to reboot his high-finance career with the help of a faithful cadre of highly placed friends and former business associates.

In a major victory for Quattrone, a federal judge in Manhattan signed off on a deal Tuesday that would dismiss obstruction-of-justice charges against the former Credit Suisse investment banker if he doesn't break the law in the next 12 months. Unlike most deferred prosecution agreements, Quattrone made no admission of guilt, leading legal observers to label the agreement an exoneration.

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A triumphant Quattrone read a brief statement outside the courthouse, thanking his lawyers and friends and saying he looks forward to getting back to business. In a statement, Manhattan U.S. Attorney Michael Garcia, said the settlement is "an appropriate resolution of the case in light of all the facts and circumstances."

The settlement brings to a close a bitterly fought legal battle and ends the possibility of a third trial. Quattrone was charged in March 2003 for allegedly urging fellow Credit Suisse bankers to destroy records after learning of a federal investigation into how the bank distributed cheap shares of hot initial public stock offerings. His first trial ended in a hung jury, but he was retried and convicted in May 2004 on two counts of obstruction of justice and one count of witness tampering. He faced a prison term of up to 18 months.

Then his fortunes shifted. In March, a federal appeals court reversed the conviction and the Securities and Exchange Commission overturned a lifetime ban imposed by the National Association of Securities Dealers.

Quattrone, 50, did not specify his plans, but observers say he will have plenty of options in Silicon Valley, where supporters have rallied behind him.

With the public markets still largely closed to tech upstarts, Quattrone likely will open an investment boutique focused on mergers and acquisitions, says New York investment banker Ken Marlin. After all, Quattrone not only knows and understands the engineers who start the companies; he understands the venture capitalists who fund them.

"Frank Quattrone will do well in that world because to be really successful in the M&A world you need a combination of assets: access to buyers and sellers, in-depth knowledge of the industry you serve, and you have to be a good negotiator. These are all skills that Frank Quattrone has got," Marlin said. "If he wanted to go back to a large, established investment bank, there could be the potential for some issues he might have to work through. But as an independent, he has the luxury to start small and build up."

Quattrone would establish himself in an even stronger position if he were to reassemble his old team of star bankers. Top lieutenants George Boutros and Bill Brady, co-chairmen of Credit Suisse's technology group, attended his trials in New York.

"I'll tell you what, if he goes back into the banking business, he's got my business," said T.J. Rodgers, chief executive officer of Cypress Semiconductor Corp., who now turns to Credit Suisse.

Dubbed "God's banker," Quattrone's success made him the ideal fall guy in the government's rush to prosecute after billions of dollars were made and lost in the Internet collapse, his friends say. In 23 years, Quattrone helped technology companies raise more than $65 billion, and he and his team led more than 175 initial public offerings and nearly 200 other financing transactions. They also worked on more than 400 mergers and acquisitions.

Quattrone came under scrutiny for allegedly pressuring analysts to overvalue companies and for setting up about 300 brokerage accounts to give shares in hot IPOs to a privileged list of tech company executives and others, both common practices in the Internet heyday. Credit Suisse did not admit or deny any wrongdoing for such practices but settled with regulators investigating stock allocations, paying $100 million in 2002.

Quattrone was not charged with either but with obstructing the government's probe. The government's case hinged on one e-mail he sent urging employees to follow another banker's instruction to "clean up" their files.

Ultimately, it was Quattrone who prevailed, dealing a major blow to the Justice Department, which had scored a number of high-profile victories in its crackdown on corporate fraud -- from Enron executives Kenneth Lay and Jeffrey Skilling to WorldCom CEO Bernard Ebbers. Quattrone lined up a top-notch legal team and refused to plead to lesser offenses, maintaining his innocence.

Friends say Quattrone was dismayed to be linked in news reports to corporate scallywags like Lay and Ebbers. The ensuing courtroom saga took a toll on his health and that of his wife, Denise, friends say. But Quattrone kept up his spirits and his golf game. He took advantage of his free time to drive his daughter to work each day, and he has donated time and money to the Tech Museum of Innovation in San Jose and to Santa Clara University's Northern California Innocence Project, which works to exonerate poor California prisoners it believes were wrongfully convicted.

Innocence Project director Kathleen Ridolfi says she would have been forced to abandon her efforts without his assistance. Friends of Quattrone have raised more than half a million dollars for her organization, she said.

"He has a lot of courage. He stood up to the charges despite huge risks," Ridolfi said. "I love the guy."

Now some speculate that Quattrone may prefer to spend his time on philanthropy rather than get back into the finance game. "Frank could have retired 10 years ago," said Rodgers, a longtime friend. "He's the best I have ever dealt with, and he's rich enough to do whatever he wants."

If he decides to hang his own shingle, his allies say Quattrone's past legal troubles will not hamper his ability to operate successfully in Silicon Valley, where many viewed his prosecution as a witch hunt.

"It's the American tradition: A person is innocent until proven guilty," said Dick Kramlich, general partner of New Enterprise Associates, a Menlo Park venture capital firm. "He's done a lot for the investment banking business in Silicon Valley. He has always been, in my experience, totally professional, aboveboard and honest. ... I think it is part of the American ethic to respect somebody who perseveres against tall odds and is able to hold his dignity intact."

A long track record

In 23 years, Frank Quattrone and his team of bankers at Credit Suisse:

Helped technology companies raise more than $65 billion in investments